1120-S late filing penalties

[jskouberdis]

Good morning community,

I have a question regarding an S-Corp return that I will be filing late.  I took out an extension on 3-15-24 and the return is due on 9-16-24.  I know that the penalty is $220 per month per shareholder.  My question is when is this penalty calculated from.  Is it from 3-15-24 or because I have an extension does the penalty start accruing from 9-16-24?  Hope to hear your ideas in the near future.

Thanks,

John Skouberdis

[Strongsilence-CPA]

Have you considered filing it then amending it after 9/16?

[TaxGuyBill · Accepted solution]

It would start on 9/16/24.  It would not be retroactive.

[jskouberdis]

That is an option but I would rather not go through the trouble of doing that because my client is a procrastinator and I would probably then have to amend his 1040 which is due at 10-15-24.

John Skouberdis

[jskouberdis]

That is what I thought but somebody else told me that the extension didn't count.  Because I have extended the due date then being late is filing after 9-15-24.  Thanks for your reply.

John Skouberdis

[Just-Lisa-Now-]

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@jskouberdis wrote:

That is what I thought but somebody else told me that the extension didn't count.  Because I have extended the due date then being late is filing after 9-15-24.  Thanks for your reply.

John Skouberdis

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Thats how I thought it worked as well...if they didnt file by the extended due date, isnt it late back to the original due date?

[jskouberdis]

I cannot find anything definite on the internet.  And the replies I get from the community go both ways.  I will find out when it gets filed late and I will try to abate the penalty since this company has never been late before.

John Skouberdis

[IRonMaN]

It would be timely filed if filed by 9/16 because of the extension.  So Bill is correct, the clock doesn't start ticking until 9/16.

[jskouberdis]

Thank you for your reply.  That is what I felt was correct but I could not find anyplace where it said that specifically.

John Skouberdis

[TaxGuyBill]

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@jskouberdis wrote:

I cannot find anything definite on the internet. 

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After discussing the amount of the penalty per month, IRM 20.1.2.6.2 says:

"For the purpose of computing this penalty, the definition of "month" is the same as it is for computing the penalty for filing late under IRC 6651(a)(1). See IRM 20.1.2.3.7.1, Period Subject to IRC 6651(a)(1)."

Then when you look up IRM 20.1.2.3.7.1, it says (bold/underlines is mine):

"The period subject to the penalty for filing late under IRC 6651(a)(1) begins on the day following the latest of the following dates:

• The normal return due date.

• The extended return due date in the case of an approved extension of time to file under IRC 6081 or related regulations.

... "

https://www.irs.gov/irm/part20/irm_20-001-002r#idm139677102681616

https://www.irs.gov/irm/part20/irm_20-001-002r#idm139677103507904

[jskouberdis]

Thanks for finding that IRS explanation of penalties.

John